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ELCDismissedOriginating Summons dated 29/01/2024· [2024] KEELC 5549 (KLR)

Softclans Technologies Limited v Nextgen Mall Management Company Limited & 2 others (Enviromental and Land Originating Summons E004 of 2024) [2024] KEELC 5549 (KLR)

Environment and Land Court
18 July 2024
3,608 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~14 min to read original · ~4 min brief

The bottom line

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A Nairobi auction buyer won the title to mall property but lost the case because it ignored Kshs 11.4 million in service charge arrears before bidding.

What this practically means

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Executive summary

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Softclans Technology Limited, the applicant, purchased Unit C (IR No. 182286) on LR No. 209/18648, Nextgen Mall, at a public auction conducted on 23/08/2022 in exercise of Gulf Bank Limited's statutory power of sale against Cresta Investments Limited. It paid the purchase price, was registered as proprietor, and later charged the property back to Gulf Bank. It filed this Originating Summons under Article 40 of the Constitution, Order 37 Rule 3 of the Civil Procedure Rules and Section 98 of the Land Act, seeking vacant possession from Nextgen Mall Management Company Limited (the 1st respondent), reinstatement of utilities, declarations of ownership and non-liability for accrued service charges, and compensation of Kshs. 100,000 per month for loss of user. The respondents opposed, relying on the Conditions of Sale signed at the auction, which stated the property was sold 'as is' without vacant possession and subject to outstanding charges of Kshs. 11,450,989 in service charge arrears. Mogeni J found ownership undisputed under Section 26(1) of the Land Registration Act, but held the applicant failed to conduct due diligence which would have revealed the arrears, and that by signing the Conditions of Sale it was bound to discharge those obligations before obtaining vacant possession. Section 98(4), which vests the purchaser's interest free of the charge, did not displace these contractual commitments. The loss of user claim was disposed of by the same finding. The Originating Summons was dismissed with costs to the respondents.

Key legal issues

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01

Whether the applicant is the registered owner of the suit property

Holding

Ownership was not in dispute; the applicant is the registered proprietor and an innocent purchaser for value

Reasoning

The court noted from the affidavits that registration of the applicant as proprietor was undisputed. Section 26(1) of the Land Registration Act renders the certificate of title prima facie evidence of absolute and indefeasible ownership. The applicant's title was obtained procedurally through the public auction and the court declined to question its legality.

p. 6
02

Whether the applicant's purchase took due diligence into account, and who bears the service charge arrears and vacancy consequences

Holding

The applicant failed to conduct due diligence; it is bound by the Conditions of Sale and must pay the outstanding service charges to obtain vacant possession

Reasoning

The advertisement invited buyers to verify details themselves. Due diligence would have revealed service charge arrears of Kshs. 11,450,989. By signing the Conditions of Sale, which stated the property was sold without vacant possession and subject to charges, the applicant entered a binding contract the court will not rewrite. Section 98(4) vests the interest free of the charge but does not displace the purchaser's contractual commitments.

p. 7
03

Whether the applicant is entitled to compensation for loss of user

Holding

No compensation awarded; the finding on lack of due diligence disposes of this claim

Reasoning

Having found that the applicant's own failure to conduct due diligence caused its inability to obtain vacant possession, the court declined to award loss of user damages, holding that its finding on the second issue answered whether the applicant should be compensated for the rent it paid on alternative premises.

p. 7

Legal principles established

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  • A purchaser at a public auction is bound by the Conditions of Sale and must conduct due diligence on encumbrances such as service charge arrears before bidding
  • A certificate of title is prima facie evidence of absolute and indefeasible ownership subject to encumbrances

Court orders

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  1. 1.The originating summons dated 29/01/2024 is dismissed
  2. 2.Costs of the suit awarded to the respondents

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 40
  • Civil Procedure Rules, 2010Order 37 Rule 3
  • Land ActSection 98(4)
  • Land ActSection 101(a)
  • Civil Procedure ActSections 3 and 3A
  • Auctioneers Rules, 1997Rules 16(1)(b) and 17
  • Land Registration ActSection 26(1)

Cases cited (12)

  • Minudi Okemba Lore v Lucy Wangui Gachara
    [2019] eKLR
  • Savings & Loans (K) Limited v Kanyenje Karangaita Gakombe & Another
    [2015] eKLR
  • Redington Kenya Limited v Thomas N. Nabende & Another
    (2021) eKLR
  • Gragan (K) Limited & Another
    [2016] eKLR
  • David Bagine v Martin Bundi
    Civil Appeal No. 283 of 1996 (1997) eKLR
  • Mursal Hajj Ali v Stanley Maina Macharia
    [2021] eKLR
  • Bank of Africa Ltd & Another v Elijah Jacktone Odhiambo Mugah & Another
    [2022] eKLR
  • Debra Limited v Board of Trustees National Social Securities Fund & Another
    [2017] eKLR
  • Kenya Breweries Ltd & Another v Bia Tosha Ltd & 5 Others
    [2020] eKLR
  • National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another
    [2001] eKLR
  • Joseph Muriithi Njeru v Mary Wanjiru Njuguna & Another
    [2018] eKLR
  • Ngere Tea Factory Company Ltd v Alice Wambui Ndome
    [2018] eKLR
Jurisdiction invoked
Article 40 of the Constitution; Order 37 Rule 3 of the Civil Procedure Rules 2010; Section 98 of the Land Act Cap 6 of 2012; Sections 3 and 3A of the Civil Procedure Act

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Softclans Technologies Limited v Nextgen Mall Management Company Limited & 2 others (Enviromental and Land Originating Summons E004 of 2024) [2024] KEELC 5549 (KLR)", Case Analysis (2024). Originating Summons dated 29/01/2024. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/5549/eng@2024-07-18

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.